Intellectual Property Rights (IPRs) Add the Fuel of Interest to the Fire of Genius by Amal Nagah Elbeshbishi 1

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Intellectual Property Rights (IPRs) Add the Fuel of Interest to the Fire of Genius by Amal Nagah Elbeshbishi 1 Recent history shows that technology and knowledge are important factors for economic

1 Intellectual Property Rights (IPRs) Add the Fuel of Interest to the Fire of Genius by Amal Nagah Elbeshbishi 1 Recent history shows that technology and knowledge are important factors for economic development. Since the creation of the first mechanism to protect inventions in the 15 th century, the Intellectual Property Rights (IPRs) system has evolved to promote innovation and encourage economic development. Ideas and knowledge are an increasingly important part of trade. Most of the value of new medicines and other high technology products lies in the amount of invention, innovation, research, design and testing involved. Films, books and computer software are bought and sold because of the information and creativity they contain, not because of the plastic, metal or paper used to make them. Africa could develop business strategies with Intellectual Property (IP) built-in when exporting to developed countries markets where value is dominated by IP. Currently, for almost all exports from Africa, valuable returns from IP are being captured in the importing countries and not in the African countries of origin. African countries can increase export income by focusing on the intangible value of products - which is the value of the non-physical characteristics of a product, such as its uniqueness, reputation, or tradition- and then controlling and managing that value through IP strategies that can result in long-lasting income gains. It is most common to think of IP in relation to creative products such as software, music, or literature. But physical products, including agricultural products and manufactured goods, also have intangible value, such as their uniqueness, high quality, or design. For examples, Kenyan Tea since Kenya produces some of the best flavor tea in the world; Egyptian and Sudanese Cotton, since Egypt s and Sudan s very fine variety of extralong staple cotton, is superior in its strength, fineness and softness, suitable for the weaving of luxurious cotton fabrics; Namibian Marula Oil, that has highly regarded healing properties since it is rich in antioxidants and oleic acid, essential components for the preservation of healthy skin; Ghanaian Cocoa, that is known worldwide for its 1 Regional Advisor on Trade, African Trade Policy Centre (ATPC), Regional Integration, Infrastructure and Trade Division (RITD), United Nations- Economic Commission for Africa (UNECA). The author is responsible for any errors and the views expressed in this article are not meant to represent the position or opinions of the United Nations or its members, nor the position of any UN staff member. Intellectual Property Rights (IPRs) Add the Fuel of Interest to the Fire of Genius 1

2 reliably high quality; Ethiopian Fine Coffee, since Ethiopia grows some of the finest beans in the world, also Ethiopian Leather that is recognized by manufacturers all over the world for its high quality. Today s successful producers- for example the Ethiopian Coffee producers, and the Ghanaian Cocoa growers- have identified their intangible assets as the foundation of their business models. They are using IP tools such as licensing, patents, trademarks, and royalty agreements to own and manage the intangible value of their products and increase their income. The potential to increase export income from applying IP tools to the development and marketing of products from Africa is significant. Some people have negative perceptions about the concept of IP. One reason for this reaction is the experience in Africa with the high price of patented pharmaceuticals for the treatment of HIV/AIDS, in which patent enforcement puts them beyond the reach of people in need. Another reason that IP is sometimes considered negatively stems from the unrealistic pressure on African countries to use IP enforcement, rather than consumer legislation, to control the trafficking in counterfeit goods. Unfortunately, these two issues the high price of patented drugs and the enforcement of counterfeit laws have confused many about whether IP should be shunned or embraced in a selective way. As a result, the truly large IP opportunities that lie in export markets have mostly been unexplored. IPRs contribute to world welfare by creating market incentives to reward those who generate new knowledge. The rewards are provided through the granting of monopoly power to the owners of knowledge, enabling them to charge prices above costs for the goods and services containing that knowledge. If such monopoly power were not granted, the incentives for discovery would be smaller, the volume of resources devoted to research and development would be smaller, and the rate of growth in world knowledge would be slower. The main economic rationales for the establishment of the IPRs system in all African countries and the effects on economic development in these countries can be summarized as follows: - Strong intellectual property protection can help African countries by improving the conditions for investment, encouraging the development of local industry, creating jobs, transferring technology, and enabling more goods to be produced. If such a regime is not in place, investors will shy away from investing, research and licensing in African countries. Why would multinational corporations risk giving their license before there is an improvement in the regulatory and legal framework that encourages innovation and protects proprietary data and products? Intellectual Property Rights (IPRs) Add the Fuel of Interest to the Fire of Genius 2

3 - Due to fear of piracy and low product prices in African countries, most multinational companies are reluctant to introduce their top of the line products in these places. Therefore, people in these countries may lose out on better quality products. - IPRs protection could improve the quality of products in African countries, as they progress from a copying culture, to one that induces local innovation. The IPRs system promotes investment to commercialize and market new local inventions so that the general public in African countries can enjoy the fruit of the innovation. - Strengthened IPRs protection is expected to encourage Foreign Direct Investment (FDI) in African countries. An environment hospitable to foreign innovative technology sets in motion a range of other dynamics such as licensing, comarketing and joint ventures, generating multiplier effects that benefit local manufacturers. - The IPRs system is designed to disseminate knowledge and information to the public through publication of patent applications and granted patents. The objective of the promotion of the technological innovation and the transfer and dissemination of technology places the protection and enforcement of IPRs in the context of the interests of society on the one hand. On the other hand, the concept of balance of rights and obligations and of mutual advantage of producers and users of technological knowledge are relevant to ensure that the exercise of the exclusive rights provided by IPRs is subject to limitations. The Agreement on Trade- Related Aspects of Intellectual Property Rights (TRIPS) is upsetting the relative comfortable situation local firms have been enjoying in African countries until now. TRIPS measures concern two aspects: - The lifting of any possibility of protecting the local production. - The application and the reinforcement of patents system (extension of their duration, patents of products and patents of process, reinforced sanctions in case of violation). We should note that for many African countries, the interpretation and implementation of the TRIPS Agreement requires resources and capacity in excess of those already existing. African countries should note that the TRIPS Agreement, in its present form, contains certain provisions that can be used to limit patent rights. These limitations or Intellectual Property Rights (IPRs) Add the Fuel of Interest to the Fire of Genius 3

4 exceptions are to be effected through national legislation, in order to curb abuses of IPRs and anti- competitive practices, and generally, to offset the negative impact of patent monopolies. It is important to note that in article 66.2 of the TRIPS Agreement, it is obligatory on the developed countries to provide incentives to enterprises and institutions in their territories for the purpose of promoting and encouraging technology transfer to leastdeveloped country members in order to enable them to create a sound and viable technological base. African countries must note that each provision of the TRIPS Agreement should be read in light of the objectives and principles set in Articles 6, 7, 8.2 and 31. Article 6 of the TRIPS agreement allows each member country the freedom to incorporate the principle of international exhaustion of rights- the underlying justification for parallel imports - in its national legislation. It further states that members are not subject to the WTO dispute settlement system for disputes relating to exhaustion of rights. In order to avoid a possible discrimination complaint under Article 27.1 and benefit all sectors of the economy, it is recommended that parallel importing should be permitted within national legislation, for patented goods in all fields of technology. Article 7 is a key provision that defines the objectives of the TRIPS Agreement. It clearly establishes that the protection and enforcement of IPRs do not exist in a vacuum. They are supposed to benefit society as a whole and do not aim at the mere protection of private rights. Article 7 states that the protection and enforcement of IPRs should contribute to the promotion of technological innovation and the transfer and dissemination of technology; the mutual advantage of producers and users of technological knowledge; social and economic welfare; and the balance of rights and obligations. Article 8.2 allows countries to take measures to prevent the abuse of IPRs by right holders or the resort to practices, which unreasonably restrain trade or adversely affect the international transfer of technology. Article 31 makes specific mention of five possible grounds for the granting of compulsory licenses; that is, in cases of refusal to deal, in situations of national emergency and extreme urgency, to remedy anti- competitive practices, in cases of public non- commercial use and to facilitate the use of dependent patents. Intellectual Property Rights (IPRs) Add the Fuel of Interest to the Fire of Genius 4

5 The IPRs system is the outgrowth of economic and political forces that have been building up over a number of years. African countries should not just complain about the negative aspects of this system, they should be proactive. All countries, developed and developing, are dissatisfied with certain aspects of the system, each country with its own list of dissatisfactions. So what should African countries do? The answer is simple. Take advantage of the good aspects and introduce policies to minimize the adverse effects of the bad aspects of the system. To be more specific we should answer the following question: What can African countries do, in light of TRIPS, to minimize the damage caused in their economies and to their capabilities to conduct research and development? A simple first step is to take advantage of the compulsory licensing provisions of the agreement to ensure that patented products are locally produced. The local firms, of necessity, will be knowledgeable about the technical details of the patent and of the technology necessary to apply the patent. Thus, a knowledge base will be created. Firms in African countries that produce for local consumption might benefit from TRIPS enforcement that grants compulsory licensing to existing firms. A second strategy is to establish a narrow scope for patents. This would provide a wider scope for improvements that are patentable in their own right. Thus, local firms would have an incentive to license foreign patents and then engage in research and development leading to patentable improvements. Such a strategy would require the governments in African countries to become very familiar with the international norms for administering patent and other intellectual property laws. A third and complementary strategy is to take advantage of the exception for the noncommercial use of intellectual property and provide for the experimental use of patents by universities and other research laboratories. This would also allow local firms to engage in reverse engineering for purposes of discovery and improvement prior to production for sale. The only way for African countries to gain from TRIPS is to own intellectual property. Support of education and scientific research can be recommended. Government policies that stimulate private research and development through government subsidies or incentives for investment in research and development would also pay dividends. Intellectual Property Rights (IPRs) Add the Fuel of Interest to the Fire of Genius 5

THE TRIPS AGREEMENT AND DEVELOPING COUNTRIES. Jayashree Watal

UNCTAD Expert meeting on the impact of FDI on development: Globalization of R&D by TNCs and implications for developing countries THE TRIPS AGREEMENT AND DEVELOPING COUNTRIES Jayashree Watal Wednesday,